Baku wary of Nabucco optimism

"Azerbaijan agrees that the project is important and interesting, but indicates that the project participants are going to tackle a range of difficult challenges," said Natig Aliyev.

Aliyev made his comments following a meeting with the European Union's special envoy for the South Caucasus, Peter Semneby. Europe is pushing aggressively for the $10.7 billion project as a means to move away from Russian energy dependence.

Planners hope Nabucco would bring gas from Caspian and Middle Eastern suppliers through Turkey and north to European markets.

Aliyev said European partners in the project should resolve matters concerning gas supplies and transit agreements before the pipeline is considered ready to go, the Azerbaijan Business Center reports.

The report says it is "obvious" the project will fall short in terms of pipeline length and gas capacity.

Europe had gathered regional parties at a May 8 summit in Prague, Czech Republic, to gather support for the pipeline, though several potential suppliers, including Turkmenistan, did not sign onto a final declaration on Nabucco.

Europe emerged from the Prague summit with only Azerbaijan as a major regional gas supplier for Nabucco.